(Yicai Global) March 19 -- Changshu Rural Commercial Bank has become China's first rural lender to redeem convertible bonds early thanks to a rising stock price this year.

The Jiangsu-based institution is able to redeem all or part of its unconverted convertible bonds at the price of their face value and the accrued interest for the current period if its closing stock price is 130 percent higher than the current conversion price for at least 15 out of 30 straight trading days, it said in a statement yesterday.

The lender issued 30 million convertible bonds worth CNY3 billion (USD448 million) in January last year at CNY100 (USD14.89) each. The conversion period began in July and the conversion price is CNY5.76 per bond.

The bank's stock price [SHA:601128] has climbed 28 percent since the turn of the year and its closing price was at least CNY7.49 (130 percent of the conversion price) for 15 trading days between Feb. 25 and March 18 so the bank can redeem the bonds. The bank's board of directors has approved the move.

Convertible bondholders will benefit more from their conversion into stocks rather than redemption, so the bank will probably need to retain a small number of the bonds.

Convertible bonds are bonds that can be converted into stocks. Holders may hold them or convert them, and the issuer is entitled to a compulsory redemption when certain conditions are met.

Set up in 2001, Changshu Rural Commercial Bank was one of the country's first rural commercial lenders and the first one wholly-owned by private capital. Last year, the bank posted a 16.2 percent rise in operating revenue to CNY5.8 billion, while net profit rose 18.1 percent to CNY1.5 billion.

Editor: William Clegg